Government creates Crown Hosting venture with Ark Data Centres

The Cabinet Office has signed a seven-year joint venture agreement with Ark Data Centres to create the Crown Hosting Service, which is intended to centralise all non-cloud datacentre services across government.

The deal is expected to save up to £105m across its seven-year tenure. The new venture, called Crown Hosting Data Centres, is 75% owned by Ark, with 25% retained by the government. It will be run by CEO Steve Hall, currently executive sales and marketing director at Ark.

“Crown Hosting Data Centres is a new joint venture between the government and the SME Ark Data Centres, and will provide public bodies with a physical space to host their computer servers and systems that aren’t in the cloud,” said a Cabinet Office statement.

“In the past, individual departments paid different amounts to either build their own centres or outsource the service as part of their own locked-in IT contracts. This deal will, for the first time, provide a cross-government approach to buying data hosting services. It will also allow government to tap into the latest advances in industry and improve energy efficiency – using datacentres that are equipped with the latest technological advancements such as real-time dynamic cooling and unique monitoring systems, all within secure compounds.”

The service will be available to any public sector body, and the first users will be the Department for Work and Pensions (DWP), the Home Office and the Highways Agency. The Cabinet Office said the service will be charged on a “pay for what you use basis” to avoid long-term lock-in.

Cabinet Office minister Francis Maude said: “It doesn’t make sense for departments to host their servers in different ways and at different costs, and in the past Whitehall wasn't even sure how many of these centres there were. With this new joint venture, we will save millions and be able to access the necessary commercial and technical skills in the market to create a thriving new business that will deliver better services and allow government to share in its future success.”

Crown Hosting Data Centres CEO Steve Hall, added: “The joint venture company will simplify the datacentre services selection process in government and further drive the unbundling of large legacy contracts. It provides publicly funded, mandated and regulated organisations with a pre-approved contract.”

When the plan for the Crown Hosting Service was first announced, in November 2013, the aim was to save a far more ambitious amount – £530m per year by 2018, according to an internal briefing paper seen by Computer Weekly at the time.

The paper said central government spent £1.6bn in the 2012/13 financial year in contracting for hosting services across Whitehall departments. Of that amount, services to support “facilities and infrastructure” worth £700m were considered suitable for initial consolidation.

However, the Cabinet Office has since said the original £530m savings figure was an “early estimate”, based on the facilities and infrastructure elements of existing large IT contracts. The new £105m savings figure represents the potential savings on physical colocation services for applications which can’t be virtualised, and excludes applications which can be virtualised and should move to the cloud.

When the tender document for the service was published in July 2014, it also included a clause specifying a latency of less than 0.5 milliseconds from two DWP datacentres in the north east of England. The clause effectively meant any companies hoping to win the contract could only offer their services if they had a datacentre less than 50 miles away from both of DWP’s existing HP-hosted datacentres in Wynyard and Doxford, near Newcastle.

However Ark – which has datacentres based in Hampshire and Wiltshire – won the deal after DWP removed its requirement for a datacentre within a certain distance of existing facilities, due to alternative options for the transition of applications that previously had the latency requirement.